Lehigh County board dives into LCA water, sewer bid

The Lehigh County Authority is taking offensive and defensive stances in consideration of taking over the Allentown water and sewer system, General Manager Aurel Arndt said Wednesday.

Arndt appeared Wednesday before the Lehigh County Board of Commissioners and made a case for the authority's possible bid on the system.

Allentown Mayor Ed Pawlowski has proposed leasing the city's water and sewer services to raise $150 million or more toward paying the city's pension obligations. LCA is among six operators interested in the job.

Others interested are private water companies Aqua Pennsylvania; American Water; United Water; National Development Council, a nonprofit community development organization; and Allentown Forward.

Of those groups, the Lehigh County Authority is the only one known to be based in the Lehigh Valley, and observers say there's an advantage to keeping control of the system local and in the hands of a nonprofit. But before the authority can compete, the county board must approve a critical charter extension.

To bid on a 50-year lease, the authority has to exist for at least another 50 years. Its charter expires in 36.

The county board used this 14-year extension request as an opportunity to dive into the authority's operations, focusing on its finances and environmental impact.

The authority hasn't determined whether it will bid on the lease, Arndt said. Taking on the city system, which generates roughly $30 million a year, would essentially double the authority's reach.

The authority would finance the acquisition with tax-exempt bonds, and the lion's share of the cost would fall on Allentown ratepayers, not suburban customers whose rates are determined by municipal service contracts, Arndt said.

It would be "disruptive" to its own system if the Allentown system went to another bidder, Arndt said, declining to explain further. The LCA and Allentown systems are interconnected, with LCA purchasing 4 million gallons a day from the city. The wastewater systems are intertwined as well.

The authority's defensive position, Arndt said, is based partially on its "preference for having control of your affairs rather than being dictated to." Offensively, he added, water and wastewater services have tremendous economies of scale.

Tim Haggerty, plant director at Ocean Spray Cranberries, said the company supports LCA's extension. Ocean Spray moved to the Lehigh Valley for utility and tax savings, but the quality of the water and wastewater system was a huge factor, he said.

While LCA is a favorite among those concerned about giving up local control, a successful bid depends on the LCA raising enough money to match those of private water companies. Commissioners were concerned whether the authority's revenue could support the lease payment.

Commissioner Percy Dougherty said he's confident LCA's board won't bid on the system if the numbers don't make sense, but that commissioners shouldn't stymie the authority's chances.

"If a private entity, a corporate water baron gets in there, I think not only the citizens of Allentown but the citizens of the suburbs are going to be at the mercy of this corporation," he said. "All I feel is we should allow for the extension so at least the board of LCA can investigate whether they wish to go forward with this."